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Investors scoop up the yen and Swiss franc

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Euro hovers at six-month highs

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Aussie hits five-year low

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Markets leaning toward Fed cut in May

(Updates to early European trading)

By Rae Wee and Yadarisa Shabong

SINGAPORE, April 7 (Reuters) - Investors bought the euro

and poured into safe havens such as the yen and Swiss franc on

Monday as the market rout from U.S. President Donald Trump's

sweeping tariffs deepened and fears of a global recession grew.

Global markets were sent into a tailspin on Monday as Asian

stocks and Wall Street futures plunged and investors wagered

that the mounting risk of a deep economic downturn could lead to

a cut in U.S. interest rates as early as May.

The risk-sensitive Australian and New Zealand dollars, as

well as the Swedish and Norwegian crowns, all tumbled against

the dollar.

But the dollar in turn fell against safe haven currencies,

down 0.75% against the yen to 145.790, after tumbling

more than 1.4% earlier in the session, as it extended its 2%

slide against the Japanese currency from last week.

"The big theme has been selling USD/JPY because it's a good

U.S. recession proxy and it's a good U.S. yields proxy and U.S.

yields tanked," said Brent Donnelly, president of market maker

and analytics firm Spectra Markets.

The dollar also hit its lowest in six months on the Swiss

franc and was last down 1.15% at 0.8505.

Both the yen and the franc have emerged as significant

winners in the aftermath of Trump's latest tariff salvo as

investors dump riskier assets and flock to safe havens in a move

that has also seen gold and government bonds catch a bid.

The other winner was the euro, which gained 0.5%

to $1.1018 and hovered near six-month highs.

"The euro has certainly performed really quite well over the

last couple of days since we've heard about the tariffs," said

Jane Foley, head of FX strategy at Rabobank.

"Maybe that's related to the euro zone current account

position, or maybe it's just related to investors still moving

out of U.S. assets and still not quite sure where they should be

moving their money to."

While the dollar is also typically known to be a safe haven

asset, that status seems to be eroding as uncertainty over

tariffs and concern over their impact on U.S. growth intensify.

European Union

countries will seek to present a united front in the coming

days against Trump's tariffs, likely approving a first set of

targeted countermeasures on up to $28 billion of U.S. imports

from dental floss to diamonds.

Sterling was largely unchanged at $1.2902.

Meanwhile, the Aussie, often used as a proxy for

risk appetite, tumbled to a five-year low earlier in the

session, and was last trading 0.4% lower at $0.6023.

The New Zealand dollar eased 0.18% to $0.5586,

having slid more than 1% earlier in the session.

Trump's tariff announcements wiped out nearly $6 trillion in

value from U.S. stocks last week. When asked about the impact,

Trump on Sunday said that sometimes medicine was needed to fix

things, adding that he was not intentionally engineering a

market selloff.

TRADERS HOPE FOR RAPID US RATE CUTS

More than 50 nations have reached out to the White House to

begin trade talks. China, which has struck back with a slew of

countermeasures including extra levies of 34% on all U.S. goods,

said on Saturday "the market has spoken".

Traders have ramped up bets of more Federal Reserve rate

cuts this year on the view policymakers would have to ease more

aggressively to shore up growth in the world's largest economy.

Markets swung to imply an around 55% chance of a Fed cut in

May, and futures now point to more than 100 basis points worth

of rate cuts by December this year. Investors were

previously expecting the Fed to keep rates on hold next month.

Fed Chair Jerome Powell cautioned on Friday it was still too

soon to know what the right response from the central bank ought

to be.